Why sign up to the Hedge Funds Standards....

“To be, or not to be: that is the question:
Whether 'tis nobler in the mind to suffer the slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles, And by opposing end them?”

So cried the Prince of Denmark as he, in a troubled state, pondered whether he should take action, or not.

How apt is that short passage from Shakespeare’s Hamlet for today’s Hedge Fund Managers as they collectively ponder whether or not to sign up to and adopt the Hedge Funds Standards Board (“HFSB”) or President’s Working Group (PWG) Best Practice Standards?

The timing of this question could not be more apposite given the tumultuous, even historic, events that have rocked the financial world in the past few weeks. Without question the way the financial services sector goes about its business will change. Politicians on both sides of the Atlantic have voiced both concern and outrage at some of the activities that have contributed to the credit crunch and subsequent liquidity crisis. There have been suggestions that regulation has failed and much commentary in the media as it attempts to point the finger of blame.

Hedge Funds and their managers have attracted scrutiny in all of this and have, as an industry group, suffered some fairly vicious attacks. Some commentary has probably been fair enough, but some has been uneducated and at times darn right wrong. Regrettably, such commentary serves to whip up emotion outside of the sector and with the public at large. The EU is calling for unprecedented disclosure by Hedge Funds and we are already seeing the first of what will probably be increasingly intrusive regulation and legislation.

What are the options of not adopting the Standards?

With all eyes being on the Hedge Fund sector and much criticism, rightly or wrongly, being heaped upon it, if the sector chooses to leave a vacuum and do nothing to address these external concerns, something or someone else will step in to fill the void. In short, if the Standards fail to be adopted voluntarily, the sector may find that the Standards are forced upon them along with a raft of other regulation and perhaps legislation. Given the current political undertones, it is likely that such regulation and/or legislation will be more heavy-handed than is necessary – and there will be little that the hedge fund sector will be able to do about it.....

Source:
http://www.opalesque.com/AMB2008/47323Why_sign_up_to_the_Hedge_Funds.html